Markets & Finance

Europe Lower, Asia Higher

February 13, 2005

European stock markets were lower on Monday. In London, the Financial Times Stock Exchange 100 lost 2.40 points, or 0.05%, to close at 5041.80. The FTSE closed in negative territory as British Energy's disappointing trading update weighed and Wall Street trades flat. BE reported third-quarter turnover of 412 million pounds and third-quarter adjusted EBITDA of 13 million pounds, lower than analysts' forecasts. It posted a quarterly loss on ordinary activities before tax of 87 million pounds. In the telco sector, mmO2 and BT profited after target price increases and upgrades from brokers. Finally, the Manchester United saga continues with JP McManus and John Magnier, who own 29% of the club, set to reject any formal takeover bid from Malcolm Glazer, according to The Sunday Telegraph.

Germany's DAX lost 1.40 points, or 0.03%, to close at 4386.40. Frankfurt closed near its session lows, having spent most of the day locked in a very narrow trading range. Having failed to breach the 4,400 level earlier in the day, dealers spoke of moderate profit-taking ahead of a busy week of economic releases and corporate earnings. Of local note, VW was the best performing Dax stock after posting fiscal 2004 results which were not as bad as first feared. Infineon shadowed sector gains after two industry groups reported rising global sales. ThyssenKrupp faded despite posting solid first-quarter results, which show profit almost tripled to 275 million euro. Elsewhere, according to Spiegel Magazine, DaimlerChrysler suffered a 600 million euro loss at its Smart car unit in 2004. Deutsche Boerse was again the focus of weekend press speculation. This time on a possible plot by key investors to oust CEO Werner Seifert as opposition mounts to his plans to take over the London Stock Exchange.

In France, the CAC-40 lost 4.64 points, or 0.12%, to close at 4012.11. The CAC40 ended lower, but managed to keep its head above the 4,000 mark as Wall Street dragged its heels in early trading. The Dow edged lower as AIG slipped on regulatory concerns, while Viacom's move to buy MCI injected an mergers and acquisition theme into the session. In this context, French performances remained mixed, held back by a handful of disappointing earnings reports. Michelin skidded 1.5% after posting lower-than-expected fiscal 2004 sales. Fourth-quarter revenues suffered an unexpected 4.6% dip. Citigroup downgraded the stock to hold from buy. Cap Gemini was also higher helped by a target upgrade by CSFB. On the M&A front, Pernod Ricard is said to have held talks with Fortune Brands, the U.S. company behind Jim Beam, about a joint offer for UK group Allied Domecq.

Asian markets were higher on Monday. In Japan, the Nikkei 225 rose 78.64 points, or 0.68%, to close at 11,632.20, its highest close in more than seven months. The index was lifted by gains in technology names such as Tokyo Electron. Chip-related stocks got a boost after the Philadelphia semiconductor index surged a near 4% on Friday. Tokyo Electron was up 3.3% while Advantest climbed 0.1%. Market sentiment was also boosted after machinery orders data late last week beat market expectations. Honda Motor closed higher after saying it plans to increase dividends rather than buy back its own shares. On the economic front, Japan's current account surplus expanded 35.1% in December from a year earlier to 1.616 trillion yen. The trade surplus was up 0.5% year-over-year at 1.3046 trillion yen, with exports up 8.5% at 5.1262 trillion yen and imports up 11.6% to 3.8216 trillion yen.

Trading on the Year of the Rooster saw Hong Kong's Hang Seng climb 171.6 points, or 1.2%, to 14,017.23, its first day closing above 14,000 since Jan. 4. Sentiment was upbeat after more visitors from China arrived during the start of the Lunar New Year holiday. Among 33 blue chips, 27 rose while only three dropped. The top percentage gainer was CNOOC, whereas the top laggard was China Merchants.

Canada's benchmark TSX/S&P gained 26.72 points, or 0.28%, to close at 9,585.22.